Why we are victims of the oil industry

[TheDonger]

WhymeWorry is on target.

Bush and Cheney are 100% bought and paid for by Big Oil and King Coal. They don't care about you, your family, your job, the air you breathe or the water you drink. Poll numbers are plummeting and indictments are flying.

This country is finally starting to come out of it's post 9/11 hypnotic trance.

Give that man a Bud Light! Folks, the most corrupt administration in decades is about to fall apart.

 

[DH106]

Avro Jockey, your points are very well-made. But, I have to disagree on two things:

1) "If American oil companies and Bush are colluding against the consumer, why hasn't any branch of local, state, or federal government brought antitrust charges against said companies?"
The answer is because all levels of government are benefitting hugely by the taxation associated with these high prices. The local, state, and federal government are just as greedy as the oil companies and oil-producing nations. Why should they complain while getting this exorbatant tax revenue?

2) "In short, quit your bitching, quit begging for so-called entitlements, control your own destiny, and drive a Yugo!"
I have no problem driving a Yugo. And, I bike everywhere I can. And, I believe in controlling one's own destiny. So, you know what I did? I started a business years ago, to control my "own destiny." Good for me. Now, that business is failing, too, because people aren't spending like they used to. It's a micro-example of the macro-devastation that's occurring to business and consumers. The oil industy has unnecessarily screwed so many employees, and now you can't even "control your own destiny," as you propose. Note the word unnecessarily.

 

[kc81900]

Give that man a Bud Light! Folks, the most corrupt administration in decades is about to fall apart.

Is Clinton back in office?

 

[jimcav]

It's getting to the point where logging on to this site is no fun any more due to all this Bush bashing. Why don't you lefties just go hug a fu&&in tree or save a whale (but kill the babies). Just stop preaching your views as gospel. If you want to blame someone for our dependence on foreign sources of oil how about starting with your sandal wearing,dope smoking ************************* faggot friends at the EPA. If not them then maybe the nimby crowd on why we can't build a Goddamn refinery in this country. Bush ain't perfect but for God's sake stop blaming him for everything that is wrong with the universe up to and including dish water spots. This is not a slam on the origional poster but at all the unabashed Bush haters on this site. You guys are so predictable.

 

[AvroJockey]

Lawmakers Urge Gas Drilling in Fla.
By H. JOSEF HEBERT
Associated Press Writer

"energy Secretary Samuel Bodman, appearing with Norton at the Senate hearing, said the White House is considering a package of energy proposals the administration plans to present to Congress soon, including possibly requiring an emergency reserve of gasoline and other refined products.
Bodman also said he was aware of no administration plans to propose a fee on oil companies to help pay for low-income energy assistance programs. Demand for such government help is expected to soar this winter. The oil industry launched an intense lobbying effort recently to head off such a fee proposal after learning it was being discussed in Congress and among some people within the administration."




By JANIS L. MAGIN
Associated Press Writer
HONOLULU (AP) -- The nation's attorneys general are asking the Federal Trade Commission to investigate "possible unlawful conduct by the petroleum industry and others" in causing record high fuel prices, Hawaii Attorney General Mark Bennett said Wednesday.
Bennett and Oregon Attorney General Hardy Myers, co-chairmen of the National Association of Attorneys General Antitrust Committee, said they were concerned about the soaring costs of oil and gasoline following hurricanes Katrina and Rita.
"We stand ready to assist you to investigate possible unlawful conduct by the petroleum industry and others that could be contributing to the increased cost of fuel," the men wrote Wednesday in a letter to FTC Chairman Deborah Platt Majoras.
More than 45 states are already investigating the cause of the escalating fuel costs since late August, when Katrina slammed into the Gulf Coast, according to the letter. They noted that the average price nationally for regular unleaded gas was above $3 a gallon, and said the cost of home heating oil would likely rise as temperatures begin to drop across the mainland.
Although the FTC does not have jurisdiction to prosecute cases of criminal violations of federal antitrust laws, it can refer those cases to agencies that do, Bennett said.
Meanwhile, Senate minority leader Harry Reid on Wednesday challenged congressional Republicans to hold hearings to investigate rising fuel costs, saying oil companies are reaping large profits while raising prices at the pump.
"The money is going to these big oil companies, and we want to know why they're making the money they are and we want to see their books," Reid, D-Nev., said at a Las Vegas news conference to promote energy legislation by Democrats.
Last month, attorneys general from a number of states held a telephone strategy session to discuss the rapidly escalating fuel prices and possible investigations into gouging. Prosecution for price gouging is generally a state matter unless it involves some form of collusion or other activity in violation of federal antitrust laws.




Last time I checked Avros were still running on JetA. You may still be able to fill up your suv and not give a rats ass about anyone else less fortunate, but in case you have not noticed the whole damm airline industry has been turned upside down because of soaring fuel costs! I'm not saying it's all Bush's fault, the Dems are just as guilty! There is something wrong here when the Rich get Richer and the airlines get poorer!

You know its a crisis when I can't even justify making the drive from Waukesha to Lambeau with these fuel prices.

I give solid economic theory, which can be backed up by any macroeconomics text, as to why oil remains at near record highs, and your ammunition is an AP article! Would you like me to teach you how to dissect a news article for tangible information? The word investigate is used throughout this article, but no company is being investigated! The prices themselves are being investigated, but no entities of "control". This just reaffirms my position on the intellectual sloth of our society!

None of this contests my stance that OPEC's supply and our demand are the driving forces behind the current price of oil, and that US oil companies are just sideline beneficiaries. Do I hate paying $3/gal for gas? He|| yes!!! Do I think US oil companies are overpaid for their product? He|| yes!!! Do I think whining to my Congressman and President will do anything about it? He|| no!!! Washington could regulate domestic sources of oil, setting an oil price for the consumer. Though this would encompass regressionary policy, and go against much of what our society is based on.

Let me ask this, if you produced a product that could fetch $50, would you charge $10 to complete strangers because you feel generous? I doubt it.

Eventually people are going to wake up and realize that the government is not there to protect your pocketbook. Use your cumulative consumer power to demand products that minimize our dependance on this resource. Letting market forces prevail, is the only true answer in a capitalistic society. Bitching about Bush and oil companies, while filling your Ford Explorer, parallels a crack dealer complaining about the crime in their city; both are part of the problem.

I will give you a little slack because your a CheeseHead, and from Waukesha (my hometown). BTW, do I know you?

 

[scoreboard]

My new Hero

AVROJOCKEY, you go boy!!

 

[miles otoole]

Is Clinton back in office?

No kidding...and it looks like Clinton round II is about to darken our futures.

 

[runwayjockey]

Avro why don't you read this and tell me again about how well capitalism is working for you and me.

Ignorance is bliss!


A Star Consumer Watchdog Report

Big squeeze by big oil

The U.S. oil industry, wanting to drive up profits, shuttered dozens of refineries over the past quarter century. You feel the pinch at the pump every time you fill up.

[SIZE=-1]By STEVE EVERLY[/SIZE]

[SIZE=-1]The Kansas City Star[/SIZE]

ARKANSAS CITY, Kan. — The dormant complex here at the edge of Kansas is a weathered still-life of a bygone era.
Remnants of rusty pipes and storage tanks hint at the oil refinery that once hummed here on the banks of the Arkansas River.
Property that could produce enough gasoline to satisfy half the state’s thirst for the fuel is now overrun with prairie grass. Abandoned buildings sit with plywood-shuttered windows.
It’s a fate few here thought possible. Even nine years after the refinery closed, some former employees still can’t believe what happened to the economic lifeblood of the community since 1918. They still ponder how a deal to sell the refinery fell apart.
So does Malcolm Turner. He led a group that wanted to buy the refinery. They offered the owner, Total Petroleum Ltd., $37 million and thought they had a deal. But Turner said Total backed out at the last minute — offering scant explanation.
Seeking answers, Turner hopped on a flight from Dallas to Total’s North American headquarters in Denver. Over a round of golf with Total executives, the discussion finally got to the question: Why would Total walk away from $37 million and prefer to sell a perfectly good refinery for scrap?
“They finally said by closing the refinery it would tighten up the market,” Turner recalls. “They thought they would benefit.”
At the time, Total told employees the sale fell through and the company was closing the refinery for business reasons. The company has declined repeated requests for more comment on its decision-making process.
Turner, a decades-long veteran in the oil industry, was dumbfounded that the company shut the plant. But similar stories have been quietly playing out across the country — wiping out thousands of good-paying jobs, devastating communities and, ultimately, squeezing consumers at the gas pump.
Drawing from dozens of interviews and previously undisclosed government documents, The Kansas City Star has discovered a largely untold story of a rapidly consolidating industry that has clamped down on refining capacity to drive up profits. Now, as retail gas prices routinely surge to more than $2 a gallon, what started as a legitimate business concern about overcapacity has become a recurring theme that has limited refining capacity in the world’s largest oil-consuming nation.
The refining issue now occupies the world economy’s center stage.
The Organization of Petroleum Exporting Countries, which itself has been under fire for high oil prices, has criticized the shortfall in U.S. refining capacity. In April, the foreign policy advisor to Saudi Arabia’s Crown Prince Abdullah said additional supplies of crude oil to the U.S. would “make no difference” because we lack the refining capacity to make it into gasoline.
Federal Reserve Chairman Alan Greenspan recently called our domestic refining capacity “worrisome.”
President Bush proposes using former military bases as sites for new refineries. Others urge a streamlining of environmental regulations to make it quicker to gain the necessary permits to build refineries. Still others argue for fewer types of environmentally friendly reformulated gas to eliminate production bottlenecks.
But such proposals miss a central question: Does the oil industry even want to significantly increase refining capacity?
ExxonMobil Corp., the world’s largest oil company, last year had a return on investment of about 25 percent on its refineries. Its 2004 earnings were $25.3 billion, a record for a public company. The company now has a cash horde of more than $20 billion. But while the company is using some of its extra cash to buy its own stock, it doesn’t have plans to build another U.S. refinery.
“You won’t see our investment spending swing with changes in near-term commodity prices,” Exxon CEO Lee Raymond recently told investors at the company’s annual meeting.
Over the past 25 years, 176 refineries have closed in the United States — including refineries in Sugar Creek and Kansas City, Kan. A new U.S. refinery hasn’t been built since 1976. Even with upgrades and expansions at the remaining refineries, domestic capacity is down 9 percent since 1981, while demand for gasoline has increased 38 percent
Today this country, which once had far more refining capacity than it needed, can no longer depend on its own refineries for all its fuel needs — even when they run virtually at full speed. Imported gasoline now accounts for 10 percent of supply, and that number is expected to grow.
The industry’s refining margins, the difference between crude oil and wholesale gas prices, have doubled and tripled at times to nearly 60 cents per gallon. Refinery and marketing profits, according to the U.S. Department of Energy, were up 292 percent for the last quarter of 2004 when compared with the same period the previous year.
The refinery squeeze already has contributed to some of the most volatile gas prices in memory. Indeed, the gasoline market now is so tight, say industry executives, that any demand spike, refinery outage or pipeline shortage can easily cause prices to soar.
Refining margins were a big topic at an oil industry conference held last fall at a resort near Las Vegas.
“Any little thing that happens, prices shoot up,” Bill Greehey, chief executive officer of Valero Energy Corp., told the audience.
Greehey, in a remarkable moment of candor for an often tight-lipped industry, dubbed this the “Golden Age of Refining,” saying “the best is yet to come.”

 

[runwayjockey]

This is not how capitalism is suppose to work!



Big squeeze by big oil
Cont.

Rooted in crisis
It took ages to reach this point.
Two 1970s oil crises orchestrated by OPEC left consumers with indelible images of long lines at gas stations and high prices at the pump. But they also marked a turning point for Big Oil that set a course for today’s higher refinery profits.
A detailed portrayal of that turnabout is contained in a previously undisclosed 393-page document, assembled by Federal Trade Commission lawyers as part of an antitrust suit that was pending before an administrative law judge that was later dismissed.
As countries around the globe nationalized their oil industries, the domestic oil industry increasingly looked to refining for profits. In some instances, according to the FTC document, the oil companies cooperated among themselves to reduce refinery capacity.
“It’s not happenstance that we’re short of refining capacity,” said David Haberman, a retired former antitrust lawyer with the Federal Trade Commission and the U.S. Department of Justice. “I really thought it could end up like it is today.”
Haberman was one of 19 lawyers who spent nearly a decade compiling a case which has been largely forgotten. The case, which was before an administrative law judge within the FTC, was dismissed in the early days of the Reagan administration. But it created a treasure trove of more than 500,000 pages of documents within the FTC archives that offer a rare glimpse inside the industry.
The FTC, replying to requests by The Kansas City Star, so far has refused to release most of those documents after initially saying they could not be located. The federal agency now says that it is required to get the approval of the oil companies that authored the memorandums and other documents before they can be released.
But the FTC’s “Complaint Counsel’s First Statement of Issues, Factual Contentions and Proof” obtained by The Star offers some details of the government’s investigation of eight major oil companies. The FTC has confirmed that the document, which is dated Oct. 31, 1980, and summarizes the FTC’s case, is legitimate — even as it refuses to release other supporting documents covered under the newspaper’s request.
The FTC’s lawyers found that Big Oil was turned on its ear by the nationalization of Mideast oil. The industry had relied on the vast supplies of Mideast oil for much of its profits and plenty of refinery capacity was crucial in being able to process it all.
But the loss of control of Mideast oil, according to the FTC report, meant the end of the old system. The major oil companies increasingly viewed refineries as having a new role — a stand-alone business that needed to be profitable.
The FTC document said the industry turned its attention to making that happen, alleging:
■ Competitors were kept out by refusing to sell refineries to them.
■ In other instances, if an independent company was looking at land to build a refinery, the site was purchased to prevent it from being built. If there was still investment interest, oil companies would temporarily reduce wholesale gasoline prices in that territory to convince the would-be buyer that it would be unprofitable.
■ In addition, refining capacity among the companies was controlled by sharing information on gasoline production. One company’s memorandum to another company that discussed plans to shut down a refinery included instructions to destroy the document after it was read.
At one point, according to the FTC report, the companies thought demand would increase significantly. But the companies “contrary to their individual business interests, did not expand refining capacity or take other actions to meet anticipated demand” — delaying or canceling refinery projects.
■ The companies also sought to keep from dumping too much gasoline on the market by following the “leading firm” in each market regarding how much gas to refine to sell to that market.
“The system worked in firming up prices,” concluded the FTC document.
During and after the FTC’s investigation, the oil companies denied the allegations that they worked together to restrict capacity. Some argued that the government was merely looking to blame the industry for high energy prices. They contended that business decisions were individual responses to the pressures of a competitive free market, not an organized effort to use their market power to thwart competition.
Shortly after Ronald Reagan became president, in September 1981, the FTC withdrew its case, saying further proceedings were “not in the public interest.” At the time, the commission noted that the decision to dismiss did not represent a decision on the merits of the case, and it left open the option of addressing competition in the industry at a later date. The case, which alleged some specific examples of “collusive” actions, was the largest ever brought by the FTC.
A generation later, the oil industry sees the dismissal as exoneration of the antitrust allegations.
“There have been numerous claims but there has never been a finding of collusion,” said Edward Murphy, group director of refining and marketing for the American Petroleum Institute, which represents the oil companies. “The fact is this has been and continues to be a very competitive industry.”
Cutting capacity
To be sure, Big Oil has at times had a legitimate reason to be concerned about overcapacity.
Even as the industry sought to reduce capacity, an unprecedented slump in demand during the recession-ridden early 1980s meant that U.S. refineries could make far more gasoline than needed.
But that didn’t last. U.S. refinery capacity dropped from 18.6 million barrels of oil per day in 1981, to 15.7 million barrels a day in 1998, as demand soared.
The domestic refining industry, which used as little as 70 percent of capacity as recently as the early 1980s, in recent years has reached as much as 97 percent of capacity — effectively operating at full steam because some capacity is always down for maintenance or retooling. And that lack of spare capacity makes prices more volatile.
Edward Galante, a senior vice president for ExxonMobil, speaking at an energy conference in Houston in February, said a “dramatic” spike in global demand for gasoline in 2004 made the market tight.
“And in tighter markets, one can expect higher margins,” he said.
But Galante said it was unlikely that any company would invest the billions that it takes to build more refineries in the United States. He argued that there is still the possibility that demand could decline and refinery margins would follow. Building more capacity, he said, could contribute to another surplus, returning the industry to the darker days of the early 1980s.
“Some say we have entered a ‘Golden Age of Refining.’ ” Galante said. “Of those I ask: How long is an age?”
Clearly, free-market adjustments explain some of the decline in capacity. Inefficient small refineries, for example, were among those closed. But other forces, say some critics, were also afoot.
“This is an industry rigged for profits,” said Jamie Court, president of The Foundation for Taxpayer and Consumer Rights.
“People think it is OPEC that’s the reason for high gas prices, and it just isn’t so.”
The concern about surplus refining capacity remained a recurring theme in the industry, even as use pushed past 90 percent.
In a 1995 internal memo obtained by U.S. Sen. Ron Wyden of Oregon, whose office has investigated the industry in recent years, Chevron discussed an industry meeting at which an analyst warned that if capacity wasn’t reduced further, there would be no substantial increase in refining margins.
In a 1996 internal memo, Mobil officials called for a “full court press” to stop an independent company from restarting a refinery in California that might reduce gas prices by 3 cents per gallon. The effort was successful.
Company officials say such efforts reflect legitimate business strategies. “There have been various investigations that have concluded there has been no wrongdoing by the oil companies and the industry in general,” said Carolin Keith, a spokeswoman for ExxonMobil.
And a Texaco memorandum, also in 1996, stated too much capacity was hurting refinery profits.
“Significant events need to occur to assist in reducing supplies and/or increasing demand for gasoline,” according to the document.
A spokesman for Chevron, which later acquired Texaco, said the company has continuously upgraded and expanded existing refineries. He referred to a recent speech by a Chevron executive for the company’s position on building new refineries.
Patricia Woertz, executive vice president of Chevron’s downstream operations, said expansion of the nation’s refining infrastructure would seem an obvious solution. But Woertz said any company would be hard pressed to find a community that would welcome a new refinery.
“Even if you believe the investment economics have become more favorable, other discouragements remain,” she said at an industry conference in San Francisco.

 

[runwayjockey]

Avro,

Before you jump to conclusions, I am pro Captialism as long as you play by the rules!